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OPINION

Opinion: Student debt is a real crisis, but government bailouts aren't the answer

Bill Bowden
Published 12:21 p.m. ET Nov. 28, 2018

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Bill Bowden is a retired Verizon Delaware executive, past president of the Delaware Quality Award, and served for 8 years in state government as the Executive Director of Delaware’s Department of Technology and Information.(Photo: Submitted)

Bill Bowden is a retired Verizon Delaware executive, past president of the Delaware Quality Award, and served for 8 years in state government as the Executive Director of Delaware’s Department of Technology and Information.

Most people would agree that student loan debt is a crisis in the making.

A recent Forbes magazine article reported: "Student loan debt is now over $1.5 trillion dollars nationally and it is the second highest consumer debt category — behind only mortgage debt — and higher than both credit cards and auto loans."

This has caught the attention of our politicians (mostly Democrats) at a national level. Some are proposing four years of free tuition at public colleges. Others believe in two years of free college at any public institution and debt-free four-year college. And others support free community college.

These solutions don't come cheap. Senator Bernie Sanders, I-Vermont, has a plan that would cost $47 billion dollars annually. Sen. Brian Schatz, D-Hawaii has a plan that would cost $87 billion the first year.

A recent News Journal article by former State Sen. Greg Lavelle proposed tax breaks for Delawareans with student debt. This article brings needed attention to this escalating problem for students and their families in our state.

His proposal details many of the long-term negative effects that this debt is creating for our fellow Delawareans. According to a LendEDU's recent study, 62 percent of students in Delaware end up being an average of $34,144 dollars in debt.

This ranks as the 3rd highest in the nation. The problem is real!

While I am concerned about the higher education costs that continue to spiral out of control, I don't believe that government bailouts for student loan debt are the correct approach. We need to broaden the conversation on this problem to include ideas that would address the causes of this problem, not the effects.

What these suggestions fail to account for is that debt forgiveness simply encourages young people and parents to make poor choices, including borrowing too much. It also encourages colleges to keep pushing up tuition costs.

College loans can drive up the price of education because they enable students, and their families to pay higher costs. Students and parents, not paying out of pocket, may be less concerned with excessive costs. Consequently, colleges don't have to worry as much about losing students if they raise tuition costs.

This creates a cycle in which student loans play a role in tuition hikes, and then tuition hikes force students to take out even more money in loans.

I see three big causes for increases in student higher education debt:

Colleges and universities are not controlling their costs with students in mind and raise tuition rates almost yearly.

Parents and students are not trained in how to consider all of their options to select and finance an advanced education

Our country has developed a social stigma biased against anything other than attending a top-tier school. That is driving risky behavior.

A government bailout for student debt will not help correct these problems.And it is simply unfair to the families/students that picked an option that fits their ability to pay, let alone to our Delaware taxpayers.

Our leaders should focus on pushing colleges and universities to lower the costs of education. More importantly, students and their families need help in understanding what are the best options for their child to have a happy, comfortable and fulfilling life.

This should include a realistic look at how a selected college major will function in today's world. Serious consideration of a vocational/technical career in lieu of a traditional college should be included in the conversation.

There are a mind-numbing number of options when considering a higher education. For example, yearly tuition only costs (add about $15,000 more for fees, room, and board) at a top-level school like Penn State will run you $33,664 (out of state), a mid-level school like James Madison $26,650 (out of state), the University of Delaware $13,680 or Delaware State University $7,689, and the Delaware Technical and Community College $4,485 (possibly free for some students). A wide range to choose from!

For those who qualify, Delaware offers the SEED program that provides free tuition for two years at DelTech or University of Delaware Associate in Arts program. Both are transferable to the University of Delaware and Delaware State University 4 year programs. Other colleges in Delaware are liberal in accepting these credits.

Perhaps investing in a less costly education to become a Registered Nurse (AA) making $70,000 a year would be fulfilling — or a plumber or welder, with the potential to make $100,000 a year. The social stigma associated with the supposed need for everyone to attend an elite or top-level 4-year school needs to be exposed as the farce that it is.

While it would be great if our government could find the resources to fund "free" college or technical training, we should not hold our breath. I would encourage families to approach this conundrum using the same logic they would use in any major purchasing decision, like buying a car or a home. They have to add affordability and value to this equation.

You simply can't buy more than you can afford. And, if you do, you are obligated to pay!